By Sarah Turner
European markets declined Wednesday as investors sold financial stocks on continued concerns over the prospect of a global economic recovery.
The pan-European Dow Jones Stoxx 600 Index declined 1.2% to 197.75. The U.K. FTSE 100 Index fell 1.1% to 4140.23, the French CAC-40 Index lost 1.3% to 3009.71 and the German DAX Index slipped 0.6% to 4572.65.
"The markets are just drifting until we get some information about which way the trends are going," said David Hussey, head of European equities at MFC Global Investment Management. "[There's] massive uncertainty about the pace and speed of the recovery," he said.
Financials are perceived as closely tied to a recovery in the economy and came under pressure on Wednesday. Santander shares lost 3.2% and BNP Paribas /zigman2/quotes/206351084/delayed FR:BNP -4.27% shares declined 2.3%.
KBC /zigman2/quotes/209494285/delayed BE:KBC -6.05% shares declined 8.1% and Dexia shares dropped 5.3% in Brussels after the Organization for Economic Cooperation and Development said that Belgian banks and insurers are still in a "fragile" condition.
Holcim shares declined 4.1% after the Swiss cement firm reiterated that it expects 2009 to be a difficult year.
Ferrovial lost 3.6% after Credit Suisse downgraded the Spanish building and infrastructure company. The broker said that it needs certainty over a potential restructuring of Ferrovial's U.K. airport operation, BAA, to be positive.
Bucking the downward trend, shares of software firm SAP /zigman2/quotes/203458330/delayed DE:SAP +0.66% climbed 2.3% after it was upgraded by Jefferies. The broker said that it believes the firm got through the second quarter of 2009 in reasonable shape and that the quarter will mark the trough of year-on-year license declines.
E.On /zigman2/quotes/205877675/delayed DE:EOAN -2.03% shares climbed 1.7%. Goldman Sachs reiterated its stance on the firm as it raised the European utilities sector to "attractive" from "neutral."
Infineon /zigman2/quotes/204995926/delayed DE:IFX -2.94% Technologies rose 9.2% after it said it will sell its Wireline Communications business to an affiliate of U.S.-based investor Golden Gate Capital for $348 million.
European investors are keeping a close eye on the U.S., where Alcoa will assume its traditional role as the first blue-chip company of the season to report financial results.
"Evidence that companies are beginning to breathe again, beginning to see orders coming back and for some semblance of normality is what people are really looking for," said Hussey at MFC Global.
U.S. stocks were in the red again ahead of the wave of corporate profit reports due out in the coming weeks.
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